Home sales posted their sharpest drop in 18 years in March, a real estate group said Tuesday, as problems in the subprime mortgage sector pushed sales well below what economists had forecast.
Sales of existing homes fell 8.4 percent to an annual rate of 6.12 million in March from February’s 6.68 million rate, the National Association of Realtors said. It was the biggest one-month drop since January 1989. Economists surveyed by Briefing.com had forecast sales would fall to an annual rate of 6.45 million in March.

At the same time, prices also dropped. The median price of an existing single-family home decreased 0.9 percent last month, to $215,300, compared with a year earlier.

And it will get worse,

The realtors’ association report reflected a housing market that is becoming increasingly unfriendly to anyone looking to sell their home. While the number of unsold existing homes for sale fell 1.6 percent in March, to 3,745,000, the time it took to sell a home increased. There was a 7.3-month supply of unsold properties on the market last month, up from a 6.8-month supply in February.
Economists said that if home prices continued to fall, potential buyers would be discouraged from acting while they waited for the bottom of the market to hit.